SIRI & XMSR

Satellite radio continues to receive attention as Canadian-based partners of both Sirius Satellite Radio and XM Satellite Radio received licenses to offer satellite radio in Canada using Sirius’ and XM’s satellites (see story, p. 1).

The news of the Canadian Radio-television and Telecommunications Commission’s approval of the license June 16 was met with a bit of a lukewarm response from one Wall Street analyst.

“The approval was long expected,” Alden Mahabir, analyst with Vintage Research said in a June 17 research report. “However, the litany of license conditions were stricter than anticipated, leaving both XM’s and Sirius’ partnerships uncertain as to whether they will move forward as planned.” Mahabir highlighted the requirement imposed by the government that for each channel produced within Canada there can be a maximum of nine non-Canadian channels made available by the companies. “It is an issue because of the scarcity of bandwidth (limited by broadcast spectrum), not satellite capacity, that both XM and Sirius live with,” Mahabir added.

Mahibir also said that acquiring programming to meet the language requirements could represent some challenges as well.

But tapping into the Canadian market could be a fruitful venture for the companies, Mahibir said. “If either were to move forward to pursue a Canadian service, it could translate into a meaningful revenue opportunity longer-term, especially if Canadian customer adoption is as strong as it is perceived to be in the United States,” he said.

Sirius also issued a pair of announcements during the week intended to broaden the reach of its service.

First, Sirius announced a partnership with Sprint to provide audio content to Sprint mobile phone customers. The specifics, including the number and content of the channels that will be offered, as well as the price of the offering, have not been released. Sirius also announced it has developed a new proprietary technology that will initially increase the company’s total network capacity by approximately 25 percent within its existing digital transmission system. Sirius said the technology, known as hierarchical modulation, will allow it to offer additional audio channels, as well as advanced services such as data and video, without affecting the quality of its broadcasts.

Sirius closed the four-day period leading up to the publication deadline of this issue where it began, at $5.99 per share. It closed down 10 cents June 14 before gaining back a penny June 15 then recovering its losses for the four-day period under examination.

XM faired better among investors this week, picking up some momentum and closing up each day. XM closed June 13 at $32.34 and by the June 16, the stock had risen to $33.83

PA & NSE

Both Panamsat and New Skies Satellites made minor announcements. Both stocks saw slight downturns in their closing prices but nothing that stood out as anything more than just market fluctuations.

Panamsat hit a historic closing high of $20.30 June 13, but the stock dropped the next two days, closing June 16 at $20.10. New Skies saw a similar pattern, closing at $17.93 June 9, followed by a string of declines. The stock bottomed out at $17.45 before recovering to $17.64 June 16.

It would appear that investors have found a comfort zone with the companies for the moment and barring any significant news, the stocks may not move much higher or lower than their current prices.